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  • Calling Out Industry Analyst Failures

    August 15th, 2014

    As most of you know, IDC is a major industry analyst. The company is also a division of IDG Group, which also brings you, among other properties, Macworld magazine and the Macworld | iWorld Expo. So you sort of expect that IDC would be fair to Apple.

    But expectations are sometimes not met. So you have the case of IDC "misunderestimating" Mac sales in the last quarter, claiming U.S. sales declined. But according to Apple, which has obviously the actual sales figures and not estimates, they increased by double digits. This is the second consecutive quarter where IDC's numbers undercounted true Mac sales.

    The long and short of it is that those who report on IDC findings ought to include the fact that those findings may be subject to error.

    That takes us to the latest survey of the worldwide share of smartphones in the second quarter of 2014. Here we see that iOS and Android, together, account for 96.4%. The remaining 3.6% is distributed among Windows Phone, BlackBerry and lesser contenders such as they are.

    Now the dominance of these two platforms is not a question, and certainly the trend seems to be accurate, which means that Android is growing faster than iOS. But IDC makes a very critical mistake, one that is never addressed, which makes the figures at the very least misleading even if you take them at face value.

    So with iOS, you know we're talking of one product line, which is Apple's iPhone. With Android, you are talking of many, but that's only part of the story. Here's where IDC continues to mislead their customers and the public quarter after quarter without addressing the contradiction.

    You see, not all Android handsets support the Google Play ecosystem. Don't forget Amazon's new Fire Phone, which won't factor into the numbers until this quarter, but you have other handset makers who fork Android and provide their own app and music stores. This is particularly true with the Asian makers of low-cost gear that have seriously hurt the largest portion of Samsung's market.

    So these handsets are technically Android, but they do not necessarily run Google's services, nor do you buy apps from Google Play, which means those sales don't impact the bottom line. Besides, sales data from these lesser-known players is murkier. Samsung pulls a common stunt, classifying shipments as sales, but there's no way to know whether the sales reported by the other companies bears any connection to reality.

    More to the point, these handsets from such companies as Xiaomi Tech, primarily reach an Asian market. But it seems possible that Xiaomi, at the very least, has hopes of entering the  western world in the near future now that they've hired former Google Android VP Hugo Barra to run the International division. Clearly he's not going to put any restrictions on market reach, with India and even South America on the horizon.

    It's a questionable, however, whether you'll be able to by an Xiaomi smartphone at your neighborhood Best Buy or Radio Shack store in the U.S. anytime soon, but hiring Barra clearly indicates that the company, founded in 2010 in Beijing, wants to expand into other parts of the world as quickly as possible.

    Now the forked and heavily modified OS on an Xiaomi smartphone is called MIUI. It doesn't matter what it looks like, though it's curiously described as having a visual resemblance to iOS and Samsung's TouchWiz, to name two really different approaches. Regardless, it's hard to see how you'd call MIUI just another Android OS despite its origins.

    To be perfectly fair, I think IDC should subdivide Android into those products that support Google Play and all or most of their Android services and those with their own app ecosystems. As a practical matter, the handsets sold by such companies as Xiaomi aren't going to enrich Google in any way and shouldn't count as part of the overall Android marketshare.

    Of course this smoke and mirrors game isn't new for IDC, Gartner and other analysts, who pulled various stunts to reduce the apparent sales impact of the iPad. Rather than putting them in the same category as PCs, as you do with a Windows tablet, iPad wasn't included. Worse, iPad market share is compared with millions of cheap Android-based tablets, such as the ones you buy at a discount store for $50 or so. I'd classify such gear as toys, not serious gear that you can actually use for productivity.

    Yes, I realize this commentary may come across as sour grapes to some, that I'm making excuses for lost market share from Apple. But shouldn't numbers of market share be presented as accurately as possible? It doesn't help Google that so many Android handsets used modified versions that do not work with their ecosystem. So why put them in the very same category other than to make Apple's apparent lesser sales growth seem more significant?

    In short, I would like to know how you can really break down Android figures into official and forked versions, and whether the market share gains, if true, apply to the former, the latter, or both. I suspect, with the problems Samsung has encountered by Samsung of late, it's the latter.



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    6 Responses to “Calling Out Industry Analyst Failures”

    1. Viswakarma says:

      Since "a picture is worth a thousand words", may I suggest that you develop a graphic (tree) to show the fragmentation of the non-Apple smartphone eco-system?

      Gene Steinberg Reply:

      @Viswakarma, Perhaps I'll engage a graphic artist in that task, but it would be nice to have more figures to go by.

      Peace,
      Gene

    2. Webb Sussman says:

      Gene,

      One minor quibble in this piece. In the first sentence of the sixth paragraph you begin with "So with iOS, you know we're talking of one product line, which is Apple's iPhone. " Shouldn't that be two product lines; iPhone and iPad?? I'm just curious about how you're thinking about this.

      Gene Steinberg Reply:

      @Webb Sussman, The IDC report is about smartphones.

      Peace,
      Gene

    3. Webb Sussman says:

      Understood. Thanks for the quick response.

    4. Aardman says:

      Of course analysts we read about will be making lots of mistakes. If they batted even a hairline over .500, they would be keeping their forecasts to themselves and make gazillions playing the stock market instead. That said, there must be a reason the profession exists, right? There must be a reason somebody is willing to pay them to broadcast their unreliable forecasts, and this is where the phrase "stock manipulation" sort of starts edging into your chain of thought.

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